Data is front and center in today’s management team meetings. Executives report spending more and more time pouring over their dashboards and analyzing variances from performance targets. They now have unbelievable performance transparency filling a vast array of reporting and real-time portals from every function, activity, and transaction. With so much focus on managing performance, are teams at risk of missing important success indicators lacking from their data?
How times have changed.
I recall the days when critical activities were effectively hidden from management oversight. We set goals, hired and trained the best people, and they went for it. Management team meetings were to escalate issues on the honor system. We knew things were working when sales were recorded. Our management oversight was very personal and team building was critical as we needed to be committed to shared success.
At quarterly team meetings, we would have some data to review, but it was at best a month old, and there was no way to dig into the data in real-time. We would have to wait for another quarter to see if the direction we provided at these meetings improved performance.
These days I can sit at my desk, launch a site, and see exactly how my business is performing. Larger enterprises produce much more data and have significantly more complex dashboards. Producing this management data is a key selling point for investments made on these systems and services. Access to this data has changed the management playbook.
On a recent strategic assessment interview, an executive proudly reported that a key factor in their current success was the firm's early investment in robust systems to provide hourly data on their business. He acknowledged he loves access to all the data provided and spends time each day reviewing it. However, as our discussion turned to external factors impacting his business, he confessed that maybe the focus on data could be distracting his team from deeper, more strategic discussions.
A peer on his team also mentioned the team’s focus on data analysis but with far less optimism. She said, “We spend far too much time comparing data trends. I can’t help wonder what we might be missing that doesn’t show up in our data.”
I love my data too. The ease with which I can access it from my modest business dashboards is, well, seductive. Hours can disappear as I drill down examining the details and find insights into how to improve my marketing or business processes. If I extrapolate the time I spend to all management teams, it is easy to see how the focus on data and analysis can be unproductive or possibly risky. If we don’t balance our data love affair with more expansive thinking about the market and competition, teams could be focusing on performing against irrelevant goals.
An illustrative example of missing the forest for the trees.
Let’s say a thriving business sets a strategic goal to grow market share next year. The leadership team establishes a goal to increase revenue by 3% year over year to achieve this goal. Then, the sales team breaks the annual target down into monthly market goals; with some having greater than a 3% goal and some with less, but in total hitting or exceeding the 3% target for the year. The management system is loaded with these targets and so begins a focus on performance against the activities and transactions to achieve the monthly, weekly, daily, and possibly hourly target set.
However, when a market innovation occurs in the second quarter in which a competitor grows its business dramatically over the last half of the year, and your sales team still hits their numbers. You have won and lost at the same time.
While the sales team is celebrating a strong performance, paying out incentives, your market has grown, and your market share may have decreased. Your team did what you asked them to do, and it was well managed, yet you still may have to scramble to regain your market share and compete for future growth.
The formidable problem-solving disciplines required for today’s fast-paced environments tend to narrow our view, possibly to a detrimental level. The data and insights we now have are invaluable, but alone, they are inadequate for true strategic management. They need to be matched up with external insights only gained from getting our heads out of our data.
Strong leadership teams confirm or tweak their goals throughout the year by regularly stepping back -out of the trees - to evaluate the forest and its surroundings.
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